Indonesia, Southeast Asia’s largest economy, continues to attract global businesses with its youthful workforce, strategic location, and expanding middle class. As companies look to scale in the region, understanding the cost of hiring in Indonesia becomes a vital part of the planning process. In 2025, the country remains relatively affordable compared to regional hubs like Singapore or Malaysia, but the total cost of employment involves more than just base salaries. Employers must also account for statutory obligations, recruitment expenses, and evolving labor regulations that affect hiring outcomes.
Read our Indonesia country guide
Salaries by Sector and Location
The cost of hiring in Indonesia is shaped in part by the wide range of salaries across sectors and regions. In Jakarta and other major cities, salaries for skilled workers have increased in line with the country’s broader economic growth. Tech professionals in software development or cybersecurity often earn between IDR 10 million and IDR 18 million per month, while professionals in banking, fintech, and infrastructure are seeing similar upward trends. In contrast, administrative and manufacturing roles in secondary cities like Semarang or rural provinces may still command lower salaries, often in the range of IDR 3 million to IDR 7 million per month.
Sector also plays a significant role in determining overall hiring costs. High-demand industries like energy, digital finance, and logistics require specialized talent, pushing salary expectations higher. As Indonesia continues its transition toward a knowledge-based economy, wages in these areas are increasing steadily. For businesses considering expansion, it’s essential to look at these benchmarks not just as salary figures, but as foundational data in evaluating the full cost of hiring in Indonesia.
Mandatory Employer Contributions
One of the most overlooked components of the cost of hiring in Indonesia is the employer’s responsibility to contribute to national welfare schemes. Employers are legally required to enroll workers in both BPJS Ketenagakerjaan (social security) and BPJS Kesehatan (healthcare), with combined contributions amounting to roughly 10–12% of the employee’s monthly wage. These are fixed obligations, regardless of whether an employee is on a permanent or fixed-term contract. In addition, employers must budget for annual leave entitlements, termination payouts, and religious holiday bonuses known as THR.
Read more: Indonesia Payroll Guide: Compliance and Best Practices
The THR bonus is particularly significant. It’s a full month’s salary paid ahead of major religious holidays, most commonly Eid al-Fitr. This annual obligation can cause cash flow strain for companies with large or growing teams if not properly anticipated. Similarly, severance costs—based on tenure and salary—can be substantial, especially for long-serving employees. These mandated benefits and contributions add real weight to the total cost of hiring in Indonesia, and must be considered from the outset of any workforce planning.
Recruitment, Onboarding, and Compliance Costs
Companies often underestimate the hidden or indirect expenses that influence the cost of hiring in Indonesia. Recruitment services, background checks, and interview assessments can add 10–20% to the initial cost of bringing a new employee onboard. Especially in specialized roles, companies may rely on executive search firms or recruitment agencies to find qualified candidates, which comes with additional fees. Once hired, employees require onboarding, training, and access to localized company systems—each of which adds to the operational expense.
Labor compliance is another critical factor. Despite government efforts to simplify employment regulations through the Omnibus Law, the reality in 2025 is that rules and enforcement still vary by province. This creates a layer of legal complexity that many foreign companies are unprepared to handle. To ensure compliance, some businesses choose to work with Employer of Record (EOR) providers or local HR consultants—services that may raise upfront costs but significantly reduce long-term risk. When tallying the cost of hiring in Indonesia, these strategic considerations must be part of the equation.
Physical and Remote Work Infrastructure
Depending on your operational model, infrastructure costs may also influence the total cost of hiring in Indonesia.
While Jakarta remains the commercial hub of Indonesia, the office leasing market in its Central Business District (CBD) has shifted in favor of tenants. Landlords are increasingly offering competitive rates, flexible lease terms, and other incentives to attract occupants amid continued efforts to reduce vacancy rates. Average rental prices for Grade A office space hover around IDR 236,000 per square meter per month, while some premium locations charge higher rates, though overall market rents have declined year-over-year. These trends mean businesses now have greater leverage to negotiate favorable terms—an important consideration when calculating the broader cost of hiring in Indonesia, especially for companies establishing a physical presence.
Beyond rent, businesses must also consider utilities, internet, office furnishings, and maintenance. For companies planning to build a permanent presence in Indonesia, these overheads can add significantly to the hiring cost baseline.
Remote work offers some flexibility, but not necessarily cost savings. Employers still need to supply laptops, software licenses, cybersecurity protections, and allowances for internet access to maintain productivity. Moreover, Indonesia’s labor laws apply to remote workers as well, including requirements for health coverage, insurance, and working hour regulations. A well-managed remote workforce can be efficient, but only if the operational infrastructure is built correctly. These dynamics further demonstrate how multifaceted the cost of hiring in Indonesia can be in practice.
Final Thoughts: The True Cost of Hiring in Indonesia
Understanding the real cost of hiring in Indonesia goes far beyond monthly wages. When you factor in mandatory benefits, compliance with local labor laws, onboarding expenses, and infrastructure needs, the total employer cost often exceeds initial expectations. For most businesses, especially those new to the Indonesian market, navigating these layers of expense can be complex without local insight. Yet, despite the challenges, Indonesia continues to offer exceptional value for companies seeking to build resilient and cost-effective teams in Southeast Asia.
Whether you’re expanding a regional hub or hiring remote staff, knowing the full cost of hiring in Indonesia is key to making informed decisions. Misjudging these expenses can lead to compliance risks or budget overruns that hurt your long-term growth. That’s why many international companies partner with experts on the ground to streamline hiring, manage payroll, and stay ahead of regulatory shifts. If you’re considering entering the Indonesian market, Eos Global Expansion can help you accurately forecast hiring costs, remain fully compliant, and scale your operations with confidence.
Contact Eos Global Expansion today. Check our services here or book a free consultation now.
Photo by Jason Cooper on Unsplash
